Accounts Receivable and Bad Debts Quiz

16 multiple-choice questions with answers and explanations · 3 easy, 10 medium, 3 hard

Trade and cash discounts, the allowance for doubtful accounts, ageing schedules, write-offs and recoveries, and notes receivable.

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  1. 1Writing Off a Bad Debt — Allowance MethodUnder the allowance method, writing off a specific uncollectible account:easy
  2. 2Computing Interest on a NoteA company accepts a 6-month, 9%, $20,000 note receivable from a customer. The interest earned over the full 6 months is:easy
  3. 3Accounts Receivable: Trade Discount vs Cash DiscountGoods with a list price of $1,000 are sold on credit less a 20% trade discount, on terms 2/10, n/30. At what amount is the sale recorded on the invoice date?easy
  4. 4Aging Method — Computing the AdjustmentAn aging schedule shows a required allowance of $6,200. The Allowance for Doubtful Accounts has an unadjusted CREDIT balance of $800. The adjusting entry records Bad Debt Expense of:medium
  5. 5Percentage-of-Credit-Sales Method — Existing AllowanceA company estimates bad debts at 2% of credit sales of $300,000. The Allowance for Doubtful Accounts already has a $900 credit balance. Bad Debt Expense recorded for the year is:medium
  6. 6Recovery of an Account Previously Written OffA customer pays $700 on an account that was written off last month under the allowance method. Recording the recovery:medium
  7. 7Percentage-of-Receivables — Debit Allowance BalanceThe aging of receivables requires an allowance of $5,000. The Allowance for Doubtful Accounts currently has a $700 DEBIT balance (from heavy write-offs). Bad Debt Expense recorded is:medium
  8. 8A Dishonored Note ReceivableA customer fails to pay a $5,000 note receivable plus $200 of accrued interest on its maturity date (a 'dishonored' note). Assuming collection is still expected, the company should:medium
  9. 9Accounts Receivable: Cash Collected Within the Discount PeriodA customer is invoiced $1,500 on terms 3/10, n/30 and pays within ten days. How much cash does the seller receive?medium
  10. 10Net Realisable Value of Accounts ReceivableAccounts receivable are $60,000 and the allowance for doubtful accounts is $3,500. At what amount are receivables reported on the balance sheet?medium
  11. 11Direct Write-Off Method: The Journal Entry for a Bad DebtUnder the DIRECT write-off method, a customer’s account that proves uncollectible is written off with the entry:medium
  12. 12Accounts Receivable: A Credit Balance on a Customer's AccountA customer’s account in the sales ledger shows a CREDIT balance. The most likely reason is that:medium
  13. 13Ageing of Accounts Receivable: What Does the Schedule Show?An aged receivables schedule shows:medium
  14. 14IFRS 9 — Impairment of Trade ReceivablesUnder IFRS 9's simplified approach, the loss allowance for ordinary trade receivables is measured at:hard
  15. 15Non-Interest-Bearing Note — Imputed InterestA company accepts a $10,000, non-interest-bearing, 2-year note receivable in exchange for services, when the market rate for a similar note is 10%. The company should initially record the note receivable at:hard
  16. 16Factoring Accounts Receivable: Cash Received from the FactorA company sells $50,000 of accounts receivable to a factor, without recourse, for a fee of 4%. How much cash does it receive?hard

Practise accounts receivable and bad debts with full problems

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